Crown Holdings Inc (CCK)

Based on the provided data, Crown Holdings Inc's liquidity ratios show the following trends over the five-year period:

1. Current Ratio:
- The current ratio measures the company's ability to cover its short-term liabilities with its short-term assets.
- Crown Holdings Inc's current ratio fluctuated in the range of 1.09 to 1.22 during the period.
- A current ratio above 1 indicates that the company has more current assets than current liabilities, suggesting good short-term liquidity.
- Despite some fluctuations, the company generally maintained a current ratio above 1, indicating a relatively solid position in meeting its short-term obligations.

2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventories from current assets.
- Crown Holdings Inc's quick ratio ranged from 0.59 to 0.74 during the period.
- A quick ratio below 1 might indicate potential challenges in meeting short-term obligations without relying on selling inventory.
- While the quick ratio remained below 1 throughout the period, it showed an increasing trend, reaching its highest point of 0.74 by December 31, 2024.

3. Cash Ratio:
- The cash ratio measures the company's ability to cover its current liabilities with its cash and cash equivalents.
- Crown Holdings Inc's cash ratio ranged from 0.13 to 0.28 over the five years.
- A higher cash ratio suggests a stronger ability to cover short-term obligations with readily available cash.
- The company experienced fluctuations in its cash ratio, with the ratio being lowest in 2021 and highest in 2023.

In conclusion, while Crown Holdings Inc maintained a current ratio above 1, indicating overall stability in meeting short-term obligations, its quick and cash ratios showed varying trends, indicating potential fluctuations in the availability of liquid assets. It would be essential for the company to monitor these ratios closely to ensure optimal liquidity management in the future.

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Additional liquidity measure

The cash conversion cycle of Crown Holdings Inc has shown some fluctuation over the years. In 2020, the company's cash conversion cycle stood at 20.16 days, indicating that it took the company approximately 20 days to convert its investments in inventory and receivables into cash.

However, by the end of 2022, the cash conversion cycle increased to 30.74 days, suggesting a longer period for the company to convert its investments into cash. This increase may be a cause for concern as it implies a potential inefficiency in managing working capital.

In the most recent year, 2024, the cash conversion cycle decreased to 18.93 days, showing an improvement compared to the previous years. A shorter cash conversion cycle indicates that the company is managing its working capital more effectively and efficiently.

Overall, it is essential for Crown Holdings Inc to closely monitor its cash conversion cycle and continue to optimize its working capital management to ensure the efficient use of resources and maintain healthy cash flows.